Daily Archives: January 11, 2013

Old news, really, but I just found out about it this week. The Japan Times had an October article here.

It looks like the prior government decided that a fair thing was to suspend the 2-year statute of limitations on being able to pay into the kokumin nenkin (National Pension). They are trying to get more Japanese to qualify for the 25-year vesting (yes, 25 years!) Also, they are giving a chance for people who already qualify to boost the amount they would receive in the program.

You would have until September 2015 to catch up on missed payments.

Remember my shorthand calculation: A nenkin coupon, which charges about 15,000 yen a month to you, is currently worth 135 yen a month at retirement. So, as you can clearly see, in about nine years and several months, in retirement, you collect back what you paid in. Anything beyond that is gain to you. Additionally, there is a disability component.

(The deal is actually more favorable, because the nenkin coupon is deductible against your national and residence taxes in Japan.)

The older you are, the more favorable that return is. One, because you survived and are more likely to collect; and two, because you have fewer years to compound an investment to create that size of a revenue stream. Go price any private annuity, and you do not get your contribution back in 9 1/2 years. It’s more like 20 or 25 years.

Nenkin is worth it, especially if you totalize for the 25 years.

[Update 1/13/13: Here it is from the horse’s mouth, the Japan Pension Service (in Japanese).]